Why I still don’t use a credit card
Finance

Why I still don't use a credit card

February 11, 2010

[dropcap1]C[/dropcap1] redit cards were basically created for one purpose- give its owner a temporary “purchasing” power. [quote_box author=”” profession=””]Credit card companies, by virtue of their credibility and financial status, loans you this temporary purchasing power tru this plastic. In the process you are charged a certain amount for “availing” this temporary purchasing power.[/quote_box] The larger the credits or purchasing power you borrow, the bigger is the charge. This is how credit card companies earn from this process.The more you use that credit card, the greater is their income . Thus, it is understandable they will make all sort of enticements just so you will use that card. It’s their marketing ploy and it is their business.

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  • A credit card is a good leverage tool in select instances when  your cash or emergency fund isn’t readily available.
  • It is safer to use this plastic than carry a whole bundle of cash around for paying sizeable financial transactions.
  • The use of credit cards to purchase necessary products or financial obligations and use that intended cash to finance a more pressing financial concern seem logical from a financial standpoint

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Again, credit cards have very limited use in general and the risk of credit trap far outweighs the benefits of this plastic in my case.

Reasons why I don’t recommend credit card use in general:

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    • [highlight class=”highlight_yellow” style=””]I have bad spending habits, credit card is bad for me.[/highlight] The problem not the plastic, but the one’s holding it.  Problems will arises if you are not careful enough in using these credit cards. There’s no question it will plunge you into the abyss of debts if you go on credit card spree . This is not peculiar to any credit card brand or type actually. Any credit card can and will plunge you into mounds of debts if you are not careful with it.
    • [highlight class=”highlight_yellow” style=””]If I can pay in cash, I pay in cash .[/highlight]  This is my simple rule for loans and credits which I similarly apply to credit card use.
    • [highlight class=”highlight_yellow” style=””]If I can’t afford an item, I probably don’t need that item.[/highlight] This may be a bit harsh and simplistic but I have more success sticking to it.

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So what did I miss in my credit card less life so far? Nothing I believe. In fact, I’m still proud that at my age now, I’m debt averse and that includes the use of a credit card. Many people will tell me I’m wasting a potential leverage tool. Maybe, but I’m certainly happy with my cash only buying. So, no to any credit card use for now 🙂

What about you? Do you own a credit card? Are you happy with it?

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Comments (16)

  • You nailed it right Jill. The bottom line is financial discipline. This plastic offers huge advantages to those who knew how and when to use it. A good leverage tool. But I personally wouldn’t recommend it to those who knew little about it.

    Remo
  • You nailed it right Jill. The bottom line is financial discipline. This plastic offers huge advantages to those who knew how and when to use it. A good leverage tool. But I personally wouldn’t recommend it to those who knew little about it.

    Remo
  • Good article Remo, and I agree, it’s all about financial discipline. The bank is betting you wont make the payment on time. But I also bet they’re wrong. 🙂
    I find that having a credit card has improved our life. We can pay for the basic things with cc, including all our bills, groceries, charity donations, taxes, flights (very important! LOL) etc and rack up cash rewards at the same time. Also in HK we dont have to pay for cc purchases until after 2 months, so it’s like getting a loan interest free (we always pay on time). And the financial benefits are enormous. Great freebies for sign ups (before uso ang PSP giveaways dito), and ridiculous discounts (can be up to 50%) on dining and shops. BUT of course I only avail of the discounts I need, tulad ng 10% discount sa Pizza Hut, LOL (this is the reason I applied for a certain cc and got a dig camera + the equivalent of P2500 in grocery voucher + P1000 metro voucher all free when I signed up for it. That’s all I use that credit card for, and I dont splurge because I have a cc). With financial discipline, you will win the bet against the banks. 🙂

    Jill
  • Good article Remo, and I agree, it’s all about financial discipline. The bank is betting you wont make the payment on time. But I also bet they’re wrong. 🙂
    I find that having a credit card has improved our life. We can pay for the basic things with cc, including all our bills, groceries, charity donations, taxes, flights (very important! LOL) etc and rack up cash rewards at the same time. Also in HK we dont have to pay for cc purchases until after 2 months, so it’s like getting a loan interest free (we always pay on time). And the financial benefits are enormous. Great freebies for sign ups (before uso ang PSP giveaways dito), and ridiculous discounts (can be up to 50%) on dining and shops. BUT of course I only avail of the discounts I need, tulad ng 10% discount sa Pizza Hut, LOL (this is the reason I applied for a certain cc and got a dig camera + the equivalent of P2500 in grocery voucher + P1000 metro voucher all free when I signed up for it. That’s all I use that credit card for, and I dont splurge because I have a cc). With financial discipline, you will win the bet against the banks. 🙂

    Jill
  • You are right about that. When I meant 'wean' that is, to get rid of all the 'debts' incurred from 3 months to pay goods at 0% interest. Almost all department stores do this, spend this amount and you will get to pay the whole thing in installments for three months at 0% interest.We still pay our bills on time with no penalties. However, it would still be wise to just save up and pay in cash.

    bin
  • You are right about that. When I meant 'wean' that is, to get rid of all the 'debts' incurred from 3 months to pay goods at 0% interest. Almost all department stores do this, spend this amount and you will get to pay the whole thing in installments for three months at 0% interest.We still pay our bills on time with no penalties. However, it would still be wise to just save up and pay in cash.

    bin
  • @Bin, the fact that you and you're hubby is 'weaning' from credit cards (despite it's freebies) tells us all something- unlike cash, credit cards leave you in debts after you've "spent" it.So, I'll still stick to my cash only policy…

    Bonedoc
  • @Bin, the fact that you and you're hubby is 'weaning' from credit cards (despite it's freebies) tells us all something- unlike cash, credit cards leave you in debts after you've "spent" it.So, I'll still stick to my cash only policy…

    Bonedoc
  • Hello 🙂 you have very insightful posts. I reached your blog through frugal pinoy and has been reading almost all of the articles in the archive. Loved your posts.My hubby and I own credit cards from a number of banks- all for free. Everytime one is due for renewal, my husband would just tell the customer support to terminate the card. Most of the time, they would renew the card for another year on free membership fee. Like tes, we pay our bills on time and we also enjoy rebates (free movie tickets, jollibee and KFC meals, gift certificates worth at least 1000 and other freebies). Despite the convenience and 'perceived' enjoyment the cards had to offer, my hubby and I have decided that it's about time to wean ourselves from the promise of cashless shopping. We are taking baby steps toward it and I hope we can reach the goal in 2 or 3 months time. My advice (unsolicited) to others is just to stick to paying goods in cash. It does reduce spending and instills discipline. Credit cards should only be used in times of emergencies.

    bin
  • Hello 🙂 you have very insightful posts. I reached your blog through frugal pinoy and has been reading almost all of the articles in the archive. Loved your posts.My hubby and I own credit cards from a number of banks- all for free. Everytime one is due for renewal, my husband would just tell the customer support to terminate the card. Most of the time, they would renew the card for another year on free membership fee. Like tes, we pay our bills on time and we also enjoy rebates (free movie tickets, jollibee and KFC meals, gift certificates worth at least 1000 and other freebies). Despite the convenience and 'perceived' enjoyment the cards had to offer, my hubby and I have decided that it's about time to wean ourselves from the promise of cashless shopping. We are taking baby steps toward it and I hope we can reach the goal in 2 or 3 months time. My advice (unsolicited) to others is just to stick to paying goods in cash. It does reduce spending and instills discipline. Credit cards should only be used in times of emergencies.

    bin
  • *…I don't need that stuff"..

    Bonedoc
  • *…I don't need that stuff"..

    Bonedoc
  • @tess,good for you. Take note, you're "paying bills on time". That's essential for a good credit card habit.I know hsbc's rebates too. But, I'm sticking to my cash only policy. If I don't have money for something I wanted, then I probably need those stuff.

    Bonedoc
  • @tess,good for you. Take note, you're "paying bills on time". That's essential for a good credit card habit.I know hsbc's rebates too. But, I'm sticking to my cash only policy. If I don't have money for something I wanted, then I probably need those stuff.

    Bonedoc
  • I got my first credit card from HSBC because I needed to verify my paypal account. Now they gave me another card, and even BPI gave me a pre approved cred card.All of these cards were given free. No annual charges paid and I do not even pay for the renewal fees. What do I get from them? From HSBC I get rebates from caltex. This makes me save on my gas purchase. BPI gave me jollibee chicken.. and now they have chowking meals. What do they get from me? Nothing! hahahaha! I don't pay the annual fees.. and I pay my bills on time which means no surcharge for me… this makes me a happy credit card owner.. hehehe 😀

    Tes
  • I got my first credit card from HSBC because I needed to verify my paypal account. Now they gave me another card, and even BPI gave me a pre approved cred card.All of these cards were given free. No annual charges paid and I do not even pay for the renewal fees. What do I get from them? From HSBC I get rebates from caltex. This makes me save on my gas purchase. BPI gave me jollibee chicken.. and now they have chowking meals. What do they get from me? Nothing! hahahaha! I don't pay the annual fees.. and I pay my bills on time which means no surcharge for me… this makes me a happy credit card owner.. hehehe 😀

    Tes
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